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MCO plan reimbursements: Challenges, wins & how to advocate for patients & the industry

Given recent trends in managed care organization (MCO) plan reimbursement rates, how do home medical equipment (HME) providers help overcome challenges and ensure better outcomes for their patients?

In this roundtable discussion, host Kris Srinivasan digs into the perspectives and strategies needed to help navigate this landscape and explores the power of advocacy and collaboration at the state level.

Moderated by: Kris Srinivasan, senior manager, payer strategy, McKesson Medical- Surgical 


  • Terry Racciato, CA-based owner of SpecialCare and president of the CA Association of Medical Product Suppliers
  • Tyler Kiser, owner of the TLC Group and member of the Board of Directors, Atlantic Coast Medical Equipment Services Association

Key topics:

  • Minute 00:10 – Kris Srinivasan introduction & overview
  • Minute 00:42 – Terry Racciato introduction
  • Minute 01:02 – Tyler Kiser introduction
  • Minute 01:24 – MCO challenges at the state level
  • Minute 07:59 – MCO wins & success stories
  • Minute 15:09 – Building relationships with legislators
  • Minute 19:50 – Collaborating with state associations
  • Minute 22:52 – Advice for getting more involved
  • Minute 27:00 – Outro & special thanks

Full transcript:

Kris Srinivasan (narration): Welcome to an exclusive interview with two HME leaders, who are going to share their unique insights with all of us listening from across the industry.

I'm Kris Srinivasan. I lead payer strategy at McKesson Medical-Surgical. We're going to get into a conversation about MCO reimbursements, the challenges we face at a state and local level – and also the great opportunities we can create when we share information and use our collective voice as advocates for better patient care.

I'm excited to be joined here by two experts in the field, Terry Racciato and Tyler Kiser.

Kris Srinivasan: Thank you very much, Terry and Tyler, for being here today! So to get us kicked off today, could you just both please introduce yourself? Let's start with Terry.

Terry Racciato: Hi, I'm Terry Racciato. I am the President of the California Association for, uh, Medical Providers, CAMPS, as well as the president of RAC & Associates, DBA Special Care in San Diego. So I have been doing this for better than thirty years.

Kris Srinivasan: Thank you. And Tyler?

Tyler Kiser: I'm Tyler Kiser, president and founder of TLC Group in Gastonia, North Carolina. We've been operating for 12 years. Prior to that, I have 15 years in the glucose manufacturing industry and, uh, I am a board member for ACMESA and also on AAHomecare's Medical Supply Council. So I've been doing this for a few years.

Kris Srinivasan: So to kick it off today, I want to ask a couple questions around challenges, both past and present. So Terry, we're gonna start with you. You've been part of this landscape for over 30 years, as you mentioned, in the California market. When you think about the big challenges that you see at the state level, what is one story you would tell that really shows what you're dealing with?

Terry Racciato: I think one of the stories that I would come up with is the struggle that we have had with infant formulas and enterals during this time period, when the supply chain has been so difficult.

I'll give you an example. We provide infant formulas for a very large military population here in San Diego. And many of those – because of the hospital level that is here and the intensity – either are on enterals because there's a pediatric GI surgeon here for them, as well as, it's a very large NICU community, and so we have a lot of preemies. It's been very difficult to be able to feed those kids in the parameters of what needed to be done, so we really struggled. We have several hundred, at least, pediatric patients that needed the specialty formulas and we could not get them from anywhere. Um, we even resorted to eBay.

So I think that's been one of our biggest challenges. It's still not over, we're still backordered on those, but... When you're trying to deal with a young mom, who might be in her twenties, who – if that – who has been transported to another part of the country, her husband is deployed, she has a preemie baby, she has no car to get off of base, and her parents and her family are distant from here, somewhere else, and you ask that person to go, themselves, to a grocery store and buy enterals or infant formulas that they can't afford, they can't get out to do – and you have to deal with the fact that you have to feed their infant... That's really a horrible situation.

Kris Srinivasan: Yeah, absolutely. I think, you know, obviously McKesson is no stranger to supply chain challenges, right? So that's, that's our forte, is logistics.

So Tyler, same question to you. When you think about the big challenge that you see at the state level, what is one story that you'd like to share that really shows what you're dealing with?

Tyler Kiser: There's a lot of challenges. The price increases that we've had across the board on buying products, the extra surcharges for fuel charge, the increase in wages and being able to find someone who wants to work has created a lot of stress and, and, you know, challenges for us to be able to stay and, and focus and continue to support these patients with the reimbursements in which we're being given.

I was doing a survey where they had actually asked me, "How much of an impact did backorders have for your patients?" And my response to 'em was, "Well, it had no challenges for my patients". We just had to find alternative products to support them with. Well, that created more workload for us to be able to go out and find those products that were available to, uh, make these patients so they could continue to get the services that they need, so they didn't end up in the hospital. But you know, it created more workload for us to be able to do that, so there's a lot of challenges.

But, you know, we've just gotta keep plugging at it and, and get our voices all together and let these folks know that, "Hey, you know, this is what's going on. We need help".

Kris Srinivasan: Understood. And what are the really biggest challenges and concerns that you're facing in the state around reimbursement and what that holds for the industry today?

Tyler Kiser: Managed care organizations have been a huge challenge. I think it's, probably, from a national standpoint and from a state standpoint – uh, North Carolina just recently switched over to the MCOs from the traditional Medicaid program, so we now have five different MCOs now that are handling the North Carolina Medicaid, and they're getting ready to add another four to that system by the end of the year, and it's gonna be challenging.

We have kinda like what Terry said, you know, they all have their own tweaks that they want to do with, uh, prior approvals and, and how they run things and, and manage it. And it becomes a challenge to keep up with each one of their processes, uh, and making sure you're processing the claims the way they want 'em to, in order to pay them. Otherwise, they're gonna deny them and you're gonna be fighting to get paid after that. So, yeah, it's a challenge.

Terry Racciato: Our MCOs, in the state of California, saturated about 80 plus percent at this point of all of our Medi-Cal recipients or beneficiaries. Medi-Cal is our Medicaid program in California. But that's not new news, that's happened over the last 15 to 20 years. So that's been pretty stable for us.

However, there are some changes upcoming. And we have to deal with multiple different HMOs or MCOs. Some of them pay well and are timely and are patient-oriented, and others, you have to kind of stalk down to get the payments and the authorizations and the other things that you need for patients.

So it vacillates between... Lots of times they have their own individual rules and billing administration. And another challenge that we have is when they choose to have limited panels, so that it's very difficult to get a contract with them.

Kris Srinivasan: So it sounds like the layer that's been added with the managed care organizations has just brought on more challenge, obviously, for lack of a better term, than we've been talking about.

But more importantly, operationally, both of you have had to adjust the way you do business, where you do business and how you do business. Is that a fair statement?

Terry Racciato: Yes, I believe that to be true. And I'm not sure that I would ascribe all of that just to the MCOs. I think Medicare, at this point in time, has made it actually very much more difficult in the competitive bidding areas because of the low reimbursement rates.

Tyler Kiser: I'll agree to that as well with Terry, and on top of that, um, with a lot of the audits that have been going on. It's just getting to be a, um, burden in order to take care of the patients, because you have five different organizations out there, doing audits. I don't mind the audits, but the frustration is there just being way too many audits.

Kris Srinivasan: So it sounds like there's a lot of commonalities, right? And not just in North Carolina or California, but for the industry as a whole. So all of those burdens, or challenges, to our operational processes as an industry really results in us trying to figure out how to conduct business and sustain for the future.

So we're gonna flip the model now to successes, right? So we've had a ton of challenges, you all have weathered those challenges.

So Tyler, we're gonna start with you. I'd love to hear how, you know, what's working for you in helping get those rate floors set in North Carolina, and really look at the success stories, now that you've kind of weathered the storm a bit, but I know there's more to come, but let's talk about kind of those successes you've seen.

Tyler Kiser: Well, we were fortunate enough before, uh, North Carolina Medicaid switched over to MCOs to get some legislation passed. We basically shared the challenges that we had with other states that were dealing with the, uh, managed Medicaids, and so we shared those concerns with them.

And we were able to get legislation passed that the current – that any willing provider had to be allowed into network. And that the current fee schedule was the floor, meaning that the MCOs could not come in and undercut the, the fee schedule one penny. Those two things have been huge for us.

But then again, you go back to, you know, now each, uh, managed care organization has their own way of doing things, and now you've, you've taken from taking care of patients from one payer source, now going out to seven different payer sources. And at the same time that, you know, your workload quadruples at that point because you, you're not dealing with just one payer. You're dealing with, uh, so many different payers now for the same, uh, patient base.

Kris Srinivasan: Mm-hmm. That's interesting. So that the perspective of having many payers to deal with now obviously delineates a lot more work on your behalf, right?

Tyler Kiser: Absolutely.

Kris Srinivasan: But having that standard process and regulation, and not only that legislation, more importantly, is really helping you succeed as we go forward.

Tyler Kiser: If, if I could have added one other thing, it would've been to have some standardization with the, the organizations that they all had to abide by the same process – that they didn't absolutely could not go out and do their own, um, program. So...

Kris Srinivasan: Excellent. That's a great point, Tyler.

And Terry, I mean, when you hear about Tyler's success in North Carolina and a few other states, uh, mostly along the eastern seaboard, it feels like that has set these rate floors... What do you take from that? And how do you, uh, how do you plan on applying maybe some of those, those learnings to your, uh, efforts out there in California?

Terry Racciato: Well, Medi-Cal  – which is our Medicaid – had already ascribed the fact that they had an amount that, that they had to be paid by the MCOs. And that amount we were successful at being able to have increased during the PHE, retroactively to the beginning of the PHE, for the Medicare rural rate, which, in some instances, doubled what they were paying us, and that was for all respiratory products.

We are trying to get that updated so that we can include the enterals, the medical supplies and some of the bent metal, but we have gotten back millions of dollars – literally – in that particular issue. And the last thing we've been able to do is to increase... Um, we have had a 10% claw-back on all of our Medicaid since 2011. And we were able to get that negated and taken care of. We're currently working with our Medi-Cal, who sets the rates to be able to increase on some of the other components. And specifically, right now, I know they're looking at enterals and a few other things.

So we have been able to be successful in being able to point out to them what our concerns and our problems were. And they have actually listened, and they have actually responded in terms of dollars for us. We still have a ways to go, but we have been very successful along those lines.

Kris Srinivasan: That's excellent to hear Terry. And, and one thing I want to call out from your experience in having that communication dialogue with the payers – whether they be Medi-Cal, Medicare, a number of the, uh, Medicare advantage plans now that you're probably seeing – you actually conducted a research study around access to care. Do you want to just elaborate a little bit on how you, how you work through that?

Terry Racciato: Yes. Actually that's been about a two-and-a-half-year progress that we have worked on.

We got together as a group here in San Diego, and we were able to get people to actually collaborate as colleagues. Once we did that, we were able to get a, a FOIA – a Freedom of Information Act – to ask specific things from Medi-Cal as to what the utilization and other components were.

From that, we were able to document and create information to be able to feed back to them with how bad it really was. They felt they had probably three to four times as many DME providers as they actually did that accepted Medi-Cal. Many of the people that they had on their list had closed, but never closed down their number, or done other things that direction. Then, what we were able to do is to earn our own street credibility with them, to be able to use their own numbers against them, to be able to point out to them things that just really weren't what they thought they were gonna do.

Let's talk a little bit about how we were able to work collaboratively with our Department of Health Care Services. We got to know them. It doesn't help to get angry and threaten them... Tell them a good few stories that they in turn can relate, or retell, to other people.

You have to remember that they're not necessarily the enemy, they are doing this – not just to make your life miserable – because they're trying to serve a common good in their mind, and balance that with a state budget. Anything you tell them, or you ask them for, they in turn have to go back to a Department of Finance, a budget healthcare committee, CMS, legislators, and the Governor's office. So you need to give them ammunition and you need to earn your street cred with them, that what you tell them is accurate.

Kris Srinivasan: Thanks for sharing that. Tyler, would you like to add any of that, or some of your experience along those same lines?

Tyler Kiser: I, I agree a hundred percent. We're very fortunate with ACMESA group to have a wonderful relationship with our, uh, state Medicaid program. We've actually, um, brought to the table to them a few areas where they could save some, some money, but at the same time when they had issues and – uh, I'll give you a quick example.

A couple of companies who were doing biliblankets in our state, um, closed their doors to doing that service anymore. And the state was left open with no one taking care of the patients with biliblankets. And they actually called us and asked if, if we would pick up that ball and run with it. And we did, we stepped up to fill that need. So we helped them out.

You know, it's – Terry's right. You can't look at 'em as your enemy. You gotta look at 'em from the standpoint that, you know, they're having to do a job that they've been asked to legislatively, and they're trying to do the best they can and, and we've gotta work better with them – to educate them on what can work best for them and what can work best for us.

Kris Srinivasan: So that just leads me into my next thought. When you're setting yourself up for success on the legislation side, can you both just articulate: Who is it that you're gonna have to be most critical in building those relationships with? And how do you get to those folks?

Tyler Kiser: Well, I'll share it with you, it's, it's not difficult. In all reality, you just gotta reach out and call your legislators. They will actually set up meetings with you, and they will listen to your concerns.

I will share with you, I reached out to Senator Tillis a couple weeks ago, and his staff was, uh, very, very informed of the challenges in which we're going through. I was very impressed with him. Uh, I was actually very hopeful.

I was like, "Okay, you guys are getting this, because you're now seeing the challenges in, in what we're dealing with." When I talked to them about, uh, supply chain issues, one of the first things I asked was, "Where are we with the masks? From the recall, where are we with that now?" And I'm like, "Okay, so, so..." They've seen some of the things and hearing some of the challenges in which we're working with, so it was, it was very hopeful. You've just gotta reach out and pick up the phone and call them.

Kris Srinivasan: Excellent. So, Terry, what – how about you in terms of reaching out? Who was it that you really reach out to, and how do you get to them on a legislative level?

Terry Racciato: Oh, we have a system in place. You start with the healthcare budget committee on both the Senate, and in our case, the Assembly for the other portion of it, and you really key into what you can do with them.

You can also – in our instance, we have an advocacy group called Family Voices of California, that goes up to our state capitol. It is all the families and all of the special needs people, disabilities rights, and a sequence of others that are very well and highly thought of in our state capitol. We dovetail into them and we go and see our representatives with them along the way.

Don't always assume you need to see the representative themselves. They have staffers, and they have a staffer that's related to their healthcare issues. You will get much farther by trying to contact the staffer and getting an appointment with them, sometimes, than even trying to see the Assembly Member or the Senator. They are the ones that actually work the, the information and hand it off to them to tell them what their position is.

So don't ever be disappointed. And when you're gonna contact someone, don't send them a form letter that you just put your name in. Do the information. Go online, see what their legislation has been that they've done. Where are they from? What is their experiences? And do an individual letter that is specifically tailored to them and their needs and their interests, because you will get much more attention that way.

But most specifically of all: Show up – with an appointment. With pediatric patients. We had one little girl who weighed about mm, forty-five pounds. And she had osteogenesis imperfecta, which is brittle bone disease. Very cognitively intact, but very brittle, and frail. And she went with us to several offices that we went to up there. I'll be doggone, she sat behind the desk as if she was the representative in at least six of those offices. She belted out songs that stopped people in the hallways. So it's really important and critical for them to get to see your patients. They wanna talk to you, but more than that, they wanna talk to your patients.

Kris Srinivasan: Yeah, Terry. And both you raised from great points, Tyler and Terry.

I – from the perspective of fly-ins, right? A lot of the state associations do capitol fly-ins or capitol days, where everybody can get in front of a legislator at the local, state level, or the local level, even –  obviously the pandemic has shifted that to maybe virtual. So that's been interesting... uh, but they've been getting it done.

And, and on the national level, you know, the, the AAHomecare host, the virtual Washington legislative conference – same thing. You're getting in front of your legislators, you're able to really get that face time... It may be a little bit of rapid fire, uh, but it's great. The setting they do it in virtually now makes it really accessible to everybody.

And then most importantly – Terry, you hit the nail on the head – is bringing those patients to the forefront. That drives the message home that this industry is just immensely valuable to the healthcare continuum, and these patients are the "why". So great call-out there.

And so along those same lines, both of you are involved heavily at your state associations, right? Tyler with ACMESA, Terry with CAMPS.

How has connecting and coordinating and just collaborating with folks in those organizations really supported not only your own business, but the industry, in your perspectives? And we'll start with Terry on that one.

Terry Racciato: I think the increased communication and the ability to access information, to be able to feed back to either the payer sources, the national associations, or Medi-Cal, or DHCS in a more timely and more effective manner.

With our FOIA information, we were able to establish by HCPCS code exactly who were the biggest players and what volume of what they were doing for Medi-Cal so that we could get that information and be able to say, "The following six DMEs control 80% of what you are doing in the state of California for this particular HCPCS, and these are the problems we're running into", and have many of those people all sign on, and suddenly they, they understand the impact of: If we were not there, what would they do?

So I think that communication has been absolutely key, as well as collaboration, and quite frankly, trust, which was really hard to come by several years ago, but I feel has significantly changed for us as a group.

Kris Srinivasan: Yeah. So I'd say when I came into this industry almost five years ago, it's – even just the state associations collaborating was just a foreign concept, Terry. So you mentioned communication and just data sharing – that's gonna be something that's gonna be very much needed to have a sustainable future.

I know the folks at ACMESA and CAMPS have been very open about trying to, you know, cross state lines even, to reach out and say, "Hey, we've done this here. It's maybe applicable to your state" – and much like, we're – our conversation today – I think there's a lot that could be taken away from that.

Tyler Kiser: I would add, too: It gives us more than one voice. If I get up on my soapbox and scream, you know, "This, that, and the other", they're not gonna pay me much of attention, but if I've got a group of people, stakeholders that have all the same issues and the same problems... well, now we have a stronger voice.

So I think we really have to work together so that we have the same voice, we're speaking the same message, so that hopefully they can understand it better, versus being out here all alone.

Kris Srinivasan: We used to, you know, at McKesson, we used to host some roundtables, and we'd say, you know, before every roundtable, "Everybody's gotta put their swords down" was a phrase we'd use. Whether you're competitors or not in the room or outside of this room – but in the room, we're here to collaborate and really get things going, and, quite frankly, I think that's just bled over to everything outside of the, that room as well, where we can have frank discussions about how to just look at the industry as a whole, and how do we have one voice as an industry when speaking to legislators on educating them on what we do as an industry, or to payers to say what's fair and right for everybody, uh, and most importantly, the patient.

So, a lot of great advancements there. And along those same lines, I'd love to hear your both perspectives – uh, we'll start with Tyler – kind of when you're talking to other providers who may not be as engaged or may not be as involved, wherever they are in the country, what's the single most important piece of advice you want to give them, and why is it such a big priority?

Tyler Kiser: Sure. I feel like the biggest thing the most providers need to do today is to get active. You can't sit back and not be active in, in your associations, or your state associations, or even with your, your legislators. You've gotta get out and start networking, getting the message out, um, and collaborating with your other providers within your state and across the nation.

You actually will find yourself networking with several of 'em for – let's say products and services that maybe you don't do, but you get phone calls from patients who are looking for those services – you now have someone that you can work with to send those referrals to, and then vice versa, they do the same back to you. So it becomes a, a very beneficial relationship that you'll have with your state association and the members within it.

So my recommendation is, is go to one of your state association meetings, see what they do, see how they're working together, and, uh, you know, if you wanna sit in the back of the room and not do much to you watch 'em, that will be great too, but at least you'll be learning. So, uh, I would say get involved with your state associations.

Kris Srinivasan: Good points. Terry?

Terry Racciato: I think the most important thing that really helped CAMPS along was to do a calculation we sent out to the providers and said, "This is the change we have made – HCPCS by HCPCS – for the Medi-Cal rates. And what we would like you to do is go ahead and plug in your own volumes and take it out the Excel spreadsheet, and see what you've gained from the efforts that CAMPS has put forth. And then compare that against the dues that we're asking you to provide and to work with us – but we're also much more needing of your voice than we are of your membership dollars. We need you to be part of what else is going on".

You can't – in this marketplace, any longer – sit on the side, complain about what isn't, is or isn't being done, and feel as if you have no impact on it, so why bother trying?

You just can't approach it that way. You've gotta approach it in terms of, "If we're gonna make it, we're gonna make it together as an industry and as a group". And you have to be collegial, you have to be able to understand that you are part of what's going on. And sometimes that means being very careful that you don't put a quote-unquote "competitor" down in order to make yourself look bigger.

Everybody has struggled with volume. Everybody has struggled with supply. It's important that you are respectful and that you are supportive of everyone else in this industry. You can't make it alone.

Kris Srinivasan: Yeah. And one thing I can add to that from an education standpoint, I'd say: Our industry has done a great job, I'd say, the last eighteen months to two years, in really looking at legislators, looking at payer executives, and really demonstrating what we can do as an industry to impact the healthcare continuum.

I think that is going to yield an abundance of opportunities for us going forward, in the sense that we aren't gonna be the, the left-alone, 1-2% of our budget, "Why should we deal with you?" industry anymore. We're gonna be, "Oh, these guys have a great impact to the greater healthcare continuum, so let's listen to them and understand better how we can support them". So...

Thank you, Terry and Tyler, for joining us today, it was very informative. And your – just – dedication and collaboration and commitment to the industry has just gone, you know, above and beyond. And we're really looking forward to continuing working together, succeeding together, and really just impacting patients' lives day in and day out. Thanks so much for joining me, everybody, and have a great one.

Kris Srinivasan (narration): This podcast is produced by McKesson Medical- Surgical, a healthcare distributor providing medical supplies, services and more to providers across the non-acute healthcare continuum, from physician offices to long term care facilities to HME providers.

If you're interested in learning more about how to advocate for your patients, check out

Special thanks to Terry Racciato. You can find out more about CAMPS at

And special thanks also to Tyler Kiser. You can learn more about ACMESA at

I'm Kris Srinivasan. Thank you for listening.

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